State orders Scotts Valley to reverse $24 million in assets

SCOTTS VALLEY -- The state Controller's Office has ordered Scotts Valley to reverse $24 million in assets it wrongly transferred to itself from its former redevelopment agency after such agencies were disbanded statewide by Gov. Jerry Brown in February 2012.

In a letter Wednesday from the state's chief auditor, Jeffrey Brownfield, Scotts Valley must turn over the assets -- the majority being land the city has eyed for the proposed Town Center development -- to the city's successor agency.

Successor agencies are responsible for overseeing the winding down of redevelopment agencies at the local level, to take assets and pay down debt.

The assets cited by state officials are among a handful of parcels owned by Scotts Valley's Successor Agency to the Redevelopment Agency that is required to report to the California Department of Finance.

The assets involve $14.6 million that was mistakenly transferred to the city and $10.9 million shifted to the city's Housing Authority, according to Jacob Roper, spokesman for State Controller John Chiang.

"This is a straight forward review done in cooperation with Scotts Valley to ensure they're fully in compliance with the law," Roper said. "The review only determines the assets need to go back."

Scotts Valley City Manager Steve Ando said shifting the assets back to the successor agency is "no big deal," and will be done promptly to comply with state law.

"We'll just transfer it back," he said.

Ando said the three vacant parcels cited by the state are slated to be sold for developing the long-planned Town Center.

Wednesday, Scotts Valley's successor agency ordered appraisals of the three parcels in preparation of negotiating a purchase deal with Property Development Centers, the development arm of Safeway, which is working with the city to develop the Town Center.

The noted properties include a parcel next to the Kmart shopping center the city purchased from Suburban Propane; a narrow strip between Blue Bonnet Lane and Mount Hermon Road that the city bought from the Ow family and another piece of land known as the former Van Cretin parcel behind the Scotts Valley library.

"We need to have the parcels appraised ... so we can enter into negotiations with PDC," Ando said.